PROVIDENCE – During a roundtable discussion this morning at the University of Rhode Island’s Providence Campus, U.S. Congressman David N. Cicilline (D-RI) announced that he will introduce the Making College More Affordable Act when the U.S. House reconvenes on September 6th.
“There are many issues that divide Republicans and Democrats in Washington, but this shouldn’t be one of them,” said Cicilline. “Millions of young Americans are being forced to either take on massive amounts of debt or give up on the pursuit of a college degree. This is completely wrong. Higher education must be accessible and affordable to all who are willing to work hard, and not a privilege for the wealthy.”
Cicilline continued, “The Making College More Affordable Act will ensure that more young people have access to college education and the resources they need to get ahead. It reforms and simplifies our broken student loan system and moves us closer to making college a right for everyone, not a privilege for a few.”
A report earlier this month in The Providence Journal found that Rhode Island college graduates carry an average student loan debt of $35,169 – the second-highest total in the country. Right now, more than 43 million Americans working to pay off $1.2 trillion in student loan debt. Seven out of every ten graduates from a four-year college leave school with debt. Student loan debt is now a larger problem than credit card debt, car loan debt, and home equity lines of credit.
The Making College More Affordable Act will address the root causes of this problem through a five-point approach:
1) Creates an automatic payroll deduction, thereby simplifying the payment process by deducting monthly payments in the same way that Social Security contributions are deducted today.
2) Lowers the required monthly payment for undergraduate student loans from the current range of 10-20% of a borrower’s after-tax income to a starting contribution of 4% of pre-tax income, with payments increasing for incomes more than $100,000 annually.
3) Eliminates interest on student loans.
4) Shifts from a range of 10-25 years on a loan to a clearly defined 30-year loan – the same as a home mortgage.
5) Allows at least 30 million Americans who are holding student loans today to refinance existing student loan debt by entering into this new system.
Access to higher education is one of the single greatest predictors of success later in life. Among millennials, someone with a college degree, as opposed to a high school diploma, will make 62.5% more in annual income, will be three times more likely to have a job, and will be four times less likely to live in poverty.
Cicilline’s proposal ensures that more Rhode Islanders, and young people across the country, will have the opportunity to pursue a college education. A Rhode Island college graduate carrying the statewide average of $35,169 in student loan debt will save nearly $11,754 over the course of their loan – money that can be put towards opening a business, buying a home, sending your own kids to college, or saving for a secure retirement.
In addition, by eliminating interest payments for borrowers who repay their loans on time, the Cicilline Reform Plan will address the Federal government’s practice of profiting off student loans. According to the Congressional Budget Office, the federal student loan program is slated to make $1.6 billion as a result of interest rate payments this year alone.
Finally, restructuring the payment process will make it easier for borrowers to stay current on their loans. By deducting the required amount from pre-tax income, borrowers will also enjoy a new tax benefit when compared to the current system.